Dear Mr. President

MedicineDigitizing Health CareWe need new incentives For electronic record keeping, says John Halamka.

Dear Mr. President:

As you know, the United States is spending 16 percent of our gross domestic product on health care, a percentage that is likely to rise. That might be reasonable if we were getting correspondingly high quality, but we’re not. While we have some of the best individual-care facilities in the world, our system does not rank well against other industrialized nations on basic health measures.

Health-care information tech­nology is one of the major tools the United States can use to constrain cost increases and enhance quality. To date, the U.S. has adopted electronic health records (EHRs) at a much lower rate than most other industrialized nations, including Germany, Canada, the United Kingdom, and Australia. The U.S. spends 43 cents per capita on health-care IT, compared with $193 per capita in the U.K.

Incentives to introduce EHRs and a compelling business case for continuing to use them are crucial to getting the technology adopted on a wide scale. In the outpatient setting, implementing a system of EHRs that providers can easily share costs those providers $40,000 to $60,000. Yet most of the benefits go to payers and purchasers–often the U.S. government. To fix the misalignment, the government should offer incentives directly to providers.

We need to be careful, though, about what actions the government takes. A recent Congressional Budget Office report concluded that imposing penalties for failing to adopt health IT would be more cost effective than providing financial incentives. Primary-care physicians in the U.S. are already struggling with high costs and low reimbursement. Asking them to comply with another unfunded mandate based on penalties rather than incentives won’t solve the problem, because it doesn’t acknowledge the underlying economic misalignment that has discouraged adoption in the first place. The result won’t be more EHRs; it will be fewer medical students choosing primary-care careers, which will fuel even greater increases in health-care costs.

I recommend a three-point plan for your administration:

(1) Provide incentives through Medicare for the adoption and use of EHRs. Target these incentives so that cost savings are shared with clinicians.

(2) Encourage insurers to provide incentives for hospitals to adopt CPOE (computerized physician order entry). This technology, which lets physicians communicate treatment instructions electronically, is the most important tool hospitals can introduce to improve their safety, quality, and efficiency of care.

(3) Continue to provide federal funding for technology and policies that encourage interoperability between health-care providers.

If we coördinate the care of all Americans and ensure that every person has a lifetime electronic record, we will enjoy safer care at a reasonable price.